Homeowners must meet specific deadlines when filing a property damage claim, so they have a right to expect insurance companies to send fast and fair payments. Attorney Bill Voss explains an insurer’s responsibility under the Texas Prompt Payment of Claims Act and how homeowners could collect significant interest payments for delayed claims.
Benefits of the Texas Prompt Payment of Claims Act
Insurance settlement delays make it more challenging to complete repairs and increase the overall costs. Texas passed Section 542 of the Insurance Code, commonly called the Prompt Payment of Claims Act, to ease the burden on policyholders. This law sets strict deadlines regarding the length of time an insurance company has to:
- Acknowledge receipt of your claim. The insurer must contact you within 15 business days to acknowledge your submission and request any additional information needed to process your claim.
- Approve or deny the claim. The insurer must notify you that your claim has been accepted or rejected within 15 business days of the date the claim was received or when you sent the requested documentation.
- Send your payment. If some or all of your claim is approved, the insurer has five business days from the approval date to pay the accepted potion.
- Ask for an extension. If the insurer needs additional time to process the claim, it must notify you with a full explanation and reason for the extension. Regardless of the reasons, the insurer must decide within 45 days of the extension request or 60 days after receiving additional information.
If an insurer fails to meet the statute's requirements, the insurance company may be forced to pay the claim amount plus attorney’s fees and a penalty of 18 percent interest. Penalty interest can add a significant amount to the final payment on a claim, so it's well worth hiring an insurance claims lawyer to help resolve your case—especially if your insurer can be held liable for your legal costs.
Holding Homeowners’ Insurers Accountable for a Prompt Payment Penalty
Keeping good records is the best way to secure a prompt payment penalty. Texas homeowners can secure penalty interest if they can prove:
- You submitted a claim under an insurance policy. Copies of your claim documents, insurance policy, and timestamped responses from the company can help establish the claim's legitimacy.
- The insurer is liable for the claim. Liability can be more difficult to prove, but an experienced insurance attorney can read your policy carefully and examine evidence of the damage to establish coverage.
- The insurer violated one or more sections of the Prompt Payment Act. Letters, emails, and conversations with your insurer and adjusters are vital in showing a delay in your claim.
Insurance companies often delay payments or fail to investigate claims promptly as a tactic to escape liability. Short delays can “wear down” a homeowner into accepting a lower settlement, while long delays might be used to build a negligence case against the policyholder. If you can provide evidence that the claim was unfairly denied, mishandled, or involved unnecessary delays, you may be able to file an insurance bad faith claim in addition to a claim for delayed payment.
Bad faith claims typically allow for much higher damage awards. For example, policyholders may collect up to three times the amount of their actual losses if their insurers knowingly violated Chapter 541 of the Texas Insurance Code.
We Help Clients Get Their Property Damage Claims Paid
If your insurance company has delayed or underpaid your property damage claim, you should speak to an insurance lawyer at the Voss Law Firm as soon as possible. Call us at 888-614-7730 or complete our contact form today to get answers to your questions, or start reading your copy of our free book, Tricks of the Trade: How Insurance Companies Deny, Delay, Confuse, and Refuse.